Short answer: In the UK, you can earn up to £1,000 from a side hustle tax-free under the trading allowance before you must report it. In the US, you must report self-employment income and pay self-employment tax once net earnings reach $400, while income tax depends on your total income against the standard deduction. The thresholds are very different, so know which country’s rules apply to you.
This is one of the most-searched freelance questions, and the answer depends entirely on where you are. Here are both, kept separate so the lines never blur. This is general information, not personal tax advice.
UK: how much can you earn before paying tax?
In the UK, the trading allowance lets you earn up to £1,000 of gross side hustle income in a tax year without paying tax or even reporting it, according to GOV.UK. Earn more than £1,000 and you must register for Self Assessment and report it. Separately, your personal allowance means the first £12,570 of your total income is free of income tax, but if a job already uses that up, side hustle profit is taxed from the first pound above the £1,000 allowance. Our full UK side hustle tax guide covers the deadlines.
US: how much can you earn before paying tax?
In the US, the key freelance threshold is $400. Once your net self-employment earnings reach $400 in a year, you must file and pay self-employment tax of 15.3%, per the IRS. Income tax is separate and depends on your total income against the standard deduction, which is $16,100 for single filers in 2026. So you can owe self-employment tax even when little or no income tax is due. Our US self-employment tax guide explains quarterly payments.
Why are the UK and US so different?
The UK’s £1,000 trading allowance is a deliberate tax-free buffer for small earners. The US has no equivalent general allowance for self-employment; instead it uses the low $400 trigger for Social Security and Medicare contributions. The practical takeaway is simple: in the UK, £1,000 is your line; in the US, $400 is. Track your gross income against the right one.
What records should you keep either way?
In both countries, keep a simple record of all income and expenses with dates and receipts. It makes reporting painless and protects you if questioned. A basic spreadsheet is enough when you start, and the habit of separating tax money from spending money matters more than the tool.
Frequently asked questions
Is the UK £1,000 based on income or profit?
Gross income before expenses. If your takings exceed £1,000 you must report, even if profit is small.
Does the US $400 apply per client or total?
Total net self-employment earnings for the year, across all clients, not per 1099.
Do I pay tax if I have a job and a side hustle?
Likely yes, because your allowance may already be used by your main job. Side hustle profit then gets taxed sooner. Check the country-specific rules.
General information only, not tax advice. Confirm with GOV.UK (UK) or the IRS (US). Automate your tax set-aside with The Finances Toolkit.